Otsuka Pharmaceuticals was dealt a setback yesterday when the FDA approved four generic versions of its best-selling Abilify antipsychotic pill, following an unusual and protracted legal battle. Shortly thereafter, Teva Pharmaceuticals announced that it was launching a copycat medicine.

The move comes after Otsuka cited complex regulatory law to thwart generics, but the agency rejected the argument and decided that generic versions meet the standard for approval. The effort has been closely watched because, if successful, other drug makers may have been emboldened to pursue a similar strategy to thwart generic competition, which could also raise health-care costs for consumers. And Otsuka also has a great deal at stake – Abilify generated $4.9 billion in U.S. sales last year.

As we wrote previously, the FDA late last year approved Abilify for treating children with Tourette syndrome, a neurological disorder that causes tics. Since Abilify had a so-called orphan designation, which refers to a drug used to treat a rare malady like Tourette’s, Otsuka won another seven years of exclusive marketing rights – through late 2021 – before low-cost generics could appear.

But in February, the FDA surprised Otsuka by approving Abilify to treat adults with Tourette syndrome. This widened the market, but Otsuka contends FDA law would trigger a labeling change that could usher in generics. Otsuka filed a lawsuit claiming the FDA isn’t allowed to approve an indication for which a drug maker didn’t apply and charged the agency was actually attempting to usher in generic copies.

For its part, the FDA backpedaled and earlier this month told Otsuka that Abilify was now approved to treat Tourette syndrome, but only for children. However, the agency also indicated it may use a so-called carve-out approach to approve generics for treating psychiatric disorders, but not Tourette syndrome. And that is what the FDA did Tuesday.

In a letter to Otsuka, the FDA wrote that “a generic version of Abilify with the labeling related to use… in pediatric patients with Tourette’s Disorder carved out will remain safe and effective for the remaining … conditions of use.” Abilify is approved for schizophrenia, bipolar disorder, adjunctive treatment for depression and irritability associated with autism.

It’s not every day that a drug maker complains the FDA widened a market for one of its drugs. But this is what Ostuka Pharmaceuticals is doing in a lawsuit claiming the agency illegally broadened the indication for its best-selling Abilify antipsychotic, unfairly opening the door to generic competition in the process.

And the outcome could allow generic versions of Abilify on the market much sooner than Otsuka had expected, affecting the fortunes of the Japanese drug maker, which is trying to expand its presence in the lucrative U.S. market.

Here’s the background: Last December, the FDA approved Abilify for treating children with Tourette syndrome, a neurological disorder that causes tics. Otsuka welcomed the move, because its pill was scheduled to face generic competition next month, when the Abilify patent is set to expire.

This delayed generics, though, because the new indication gave Otsuka another seven years of exclusive marketing rights. That’s because of a so-called orphan designation, which refers to a drug used to treat a rare malady. This meant generic versions of Abilify could not appear until December 2021.

But last month, the FDA amended its decision by notifying Otsuka that the added indication for treating Tourette would apply to adults as well as children. By broadening the indication to include adults, Otsuka argues the FDA would trigger a labeling change that would usher in the arrival of generics.

The drug maker contends the FDA is not allowed to approve a medicine for an indication which a drug maker did not apply. The agency, however, described the change as a “corrected” approval because its earlier endorsement contained an unexplained error, according to the lawsuit filed this week in federal court.

For Otsuka, the financial implications are significant. Abilify generated more than $6.5 billion in revenue in the U.S. in 2013, the last year for which data is available, according to IMS Health, the market research firm. Globally, the pill generated about $9 billion in sales last year.

The FDA move is an “arbitrary, capricious, and unlawful abuse of its authority,” Otsuka charges in its lawsuit. “If allowed to stand, FDA’s unlawful final agency action may jeopardize important and valuable rights and benefits to which Otsuka is entitled” under federal law.

“…There was nothing innocent or unintentional in FDA’s action,” the lawsuit states. “FDA acted deliberately, intentionally and without justification…” The revised approval “was an attempt to clear a blocked path for FDA’s approval” of generic versions of the antipsychotic.

Basically, Otsuka argues the FDA is not allowed to approve a use for a medicine for which a drug maker did not seek approval. Another aspect of the legal tussle, however, hinges on how to interpret complicated FDA regulations that govern marketing exclusivity for drugs that are approved for children and have orphan designation.

Whether Otsuka will prevail remains to be seen, of course, but for now, the drug maker has succeeded in delaying generic versions of Abilify, if only until the litigation is resolved. [UPDATE: We should note that the lead lawyer for Otsuka is Ralph Tyler, who works at the Venable law firm and was previously chief counsel at the FDA].

An Otsuka spokeswoman declined to comment. An FDA spokeswoman writes us that the agency does not comment on pending litigation.

Hello, everyone, and how are you today? A steely gray sky is hovering this morning over the Pharmalot campus, where the shortest of short people has departed for the local school house and the official mascots have begun their hours-long snoozing. As for us, we are foraging for interesting stories and quaffing cups of stimulation, as you might have guessed. And you? Is your schedule filled with meetings and deadlines and what-not? To help you along, here are some tidbits. Hope you conquer the world and do keep us in mind when you see something fascinating…

Otsuka Pharmaceuticals agreed to buy Avanir Pharmaceuticals for about $3.5 billion to expand its neurologic drug portfolio ahead of an expiration of a key drug patent, Reuters reports. The deal comes as Otsuka aims to beef up its product pipeline ahead of a “patent cliff” after April 2015, when its U.S. patent for the Abilify schizophrenia drug expires and opens the way to generic competition. Global sales of the drug were $5 billion in the last fiscal year, around 40 percent of total Otsuka sales. The U.S. is the biggest market for the drug.

Security experts warn that hackers have been targeting “top executives” at companies – notably, life sciences companies – during talks over sensitive deals in an attempt to play the stock market, The Telegraph writes. The group – which has been dubbed FIN4 – have been observed collecting information from nearly 100 publicly traded companies or the firms which advise them, all of which have access to insider information that would give a “clear trading advantage.”

The Joint United Nations Program on HIV and AIDS says a scaled-up assault on the pandemic could “bend the curve” by 2020 and have it pretty much under control by 2030, MedPage Today tells us. Meanwhile, a new study in the Proceedings of the National Academy of Sciences indicates that HIV eventually evolves into a less virulent from of the virus, suggesting that one day it may infect humans without causing AIDS. according to Bloomberg News.

Following the forced departure of Guido Rasi last month, the European Medicines Agency says it plans to advertise for the post of executive director shortly, Pharma Times says.

Singapore is trying to attract foreign workers to R&D and clinical roles through tax incentives and employment visas, while China and India are looking for execs, In-Pharma Technologist reports.

Roche plans to acquire Ariosa Diagnostics, a molecular diagnostics firm which makes a prenatal test to assess the risk of Down syndrome and other genetic abnormalities, according to Reuters. Financial terms were not disclosed.

Pozen and Sanofi ended a deal less than a month before a scheduled FDA decision on whether to approve Pozen’s drug for secondary prevention of cardiovascular disease, Xconomy reports.

The U.K.’s NICE decided to recommend Soliris, a drug from Alexion Pharmaceuticals, to treat atypical hemolytic uremic syndrome without receiving the specific answers it sought about the costs to develop the Orphan drug, BioCentury says.

The U.K.’s NICE also changed its position on the National Health Service use of Roche’s Gazyvaro to treat some patients with chronic lymphocytic leukaemia and made a recommendation, Pharma Times reports.

Pfizer has completed its $635 million purchase from Baxter International of two vaccines and part of the factory in Orth, Austria, where the products are made, the Associated Press informs us.

And so, another working week is about to draw to a close. Not a moment too soon, yes? This is, as you know, our treasured signal to daydream about weekend plans. As usual, our agenda is rather modest. We plan to escort Mrs. Pharmalot to a rent party, hang with one or more short people and engage interesting sources over cups of stimulation. But what about you? This is a fine time of year to hunt for apples and pumpkins (this may bubble to the top of our own list). You could boost the economy by purchasing winter wear or reach out to a special someone. Or maybe do something completely different? Well, whatever you do, have a grand time. But be safe. See you soon…

Ebola news: U.S. health officials want some patients to forgo potentially life-saving Ebola treatments when they’re being tested so researchers can compare their response to those who get the medicines, according to Bloomberg News. Chimerix says the FDA authorized a clinical trial to begin immediately to test the safety, tolerability and efficacy of its brincidofovir drug in patients with the Ebola virus, The Wall Street Journal reports.

And more Ebola News: Ripley Ballou, head of GlaxoSmithKline’s Ebola vaccine research, tells the BBC that safety and efficacy data for its investigational treatment will not be ready until late 2015, which will be too late for this epidemic. The Wall Street Journal notes that CSL, an Australian maker of blood-plasma therapeutics, is exploring whether it can develop a plasma product to treat Ebola at the request of the Bill & Melinda Gates Foundation. And Reuters says Roche is evaluating whether to submit its Ebola virus test for emergency use approval in the U.S.

The FDA is finally preparing to launch the Office of Pharmaceutical Quality, a new effort to focus on the quality of drug products, Regulatory Focus tells us. And as a result, several major changes occurring at the Center for Drug Evaluation and Research. For instance, the Office of Compliance will cede its preapproval and surveillance inspection activities to the new OPQ and focus on compliance and enforcement operations and policy to minimize consumer exposure to unsafe, ineffective, and poor quality drugs.

India’s Department of Industrial Policy and Promotion has delayed a decision on issuing a compulsory license for the Sprycel cancer drug, because further justification is wanted from the Health Ministry, The Economic Times writes. The Health Ministry has repeatedly urged the DIPP to issue a license, because many public agencies can only purchase small quantities, partially because of the high price of the drug, which is from Otsuka Pharmaceuticals and Bristol-Myers Squibb.

An estimated 1.4 million U.S. women take custom-compounded bioidentical hormone therapy for menopausal symptoms, and most are unaware that these drugs are not FDA-approved, according to Reuters, citing new research.

Egypt’s Ministry of Health has chosen five firms to make Sovaldi hepatitis C treatment, Egypt Independent writes. The companies pledged to provide the medicine for reasonable rates for both the Health Ministry and private institutions.

Convatec owners have appointed Morgan Stanley and Goldman Sachs to explore a sale of the medical device maker which could be worth up to $10 billion, MassDevice writes.

Lilly plans to sell one of its three plants in Puerto Rico, because the patents on some of the drugs made there have expired, The Indianapolis Star writes.

The U.K.’s National Institute for Health and Care Excellence published draft guidance recommending Novartis ' Gleevec for up to three years in patients who have had a gastro-intestinal stromal tumour (GIST) and are at high risk of recurrence, Pharma Times says.

Hospira has issued a voluntary nationwide recall of certain lots of its LifeCare line of flexible intravenous solutions due to the potential for leakage, according to PharmTech.

FDA reviewers believe the benefits of a Novartis anti-inflammation drug outweighed the risks in using it to treat a type of psoriasis, according to Reuters, which notes an agency panel meets next week to review the drug.